Economist warns of looming labour shortage

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A small dip in newspaper job ads has not dented hopes that the 5.6 per cent unemployment rate is about to fall to a 23-year low.

The ANZ job ads series, which counts the number of ads in metropolitan newspapers, fell 2.8 per cent in May.

But the drop followed an exceptional year of employment growth and also masked a rise in the use of internet advertising, where ad numbers have risen 51 per cent since May last year.

ANZ measured a monthly rise of 3.4 per cent if newspaper and internet ads were measured together. The rival Olivier internet job ads survey recorded a monthly rise of 4.7 per cent.

Scott Haslem, an economist with UBS, said forward indicators such as the job ads surveys suggested unemployment would soon fall to its lowest rate since 1981.

Tony Meer, an economist with Deutsche Bank, said Australia, Britain and New Zealand were on the cusp of a historic demographic shift that would create a labour shortage over the next 10 years.

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"By the end of this year, or early next year, we'll have an unemployment rate in the low 5s or high 4s," he said. "You have to go back well over three decades ago to find a sustainable unemployment rate below that."

Unemployment was last at 5.6 per cent in 1989, before the 1990 recession, but has not fallen consistently below that mark since the mid-1970s. In 1981 the unemployment rate dipped briefly to 5.4 per cent.

Robert Olivier, a director of the Olivier Group recruitment firm, said the labour market was looking increasingly like a sellers' market. "Employers are finding it increasingly difficult to attract top candidates," he said. "It also means there will be pressure on organisations to raise salaries in their June reviews."

Ninety per cent of jobs created in the 12 months to April were full-time, said the federal Minister for Employment and Workplace Relations, Kevin Andrews.

He was responding to a report in yesterday's Herald that said more than half of all jobs created in the past 16 years had gone to casual workers, and more than a quarter of workers were employed on a casual basis.

Casuals were "an essential and legitimate part of a flexible labour market", he said, adding that they received loadings of up to 30 per cent above normal wages to compensate for the lack of entitlements.

Mr Andrews warned that if a Labor government was elected it would force employers to pay casual workers for sick leave, holidays and redundancies - a move that would force businesses to lay off staff.